Dear investors and analyst friends, good evening. Thank you for attending 2026 interim results conference of SF Holding.

Now all participants are in listen-only mode. The meeting is only reserved for the invited investors, and we are also going to provide you the slides, audio, and writer records for only internal use, but not be disclosed publicly.

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Right before the meeting get started, we'd like to remind you after the prepared remarks, we're going to have the Q&A session, please. Ladies and gentlemen, thank you very much.

Thanks for joining us for SF Holding H1 investor presentation. I'm happy to share and introduce our team with you.

The management team meeting attending this conference including Mr. Su Wang Sihai, the Chief Operating Officer; Mr.

Geng Yanfang, the Chief Marketing Officer and Chief Technology Officer; Mr. Ho Jian, and the Chief Financial Officer.

We are going to have the earnings and business highlights first, and then we're going to have the technology application, and then Alex to walk you through the financial overview, and then the management team will join us for the Q&A session, please.

Good evening, all the analysts and investors. Before I walk you through you our result, I'd like to thank all of our investors for your long-standing attention and support for SF Holding.

In H1 of 2026, faced with a complex and volatile internal experiment and in pursuit of the sustainable and healthy operations, our strategy centered on two core themes, resilience for the long term and AI-driven innovation. In China, regarding the resilience for long-term by moving from product operation to deep scenario cultivation, by extending from the consumer side to industrial-side empowerment, we continue to deepen our competitive moat and consolidate our core business.

In international market, we seize the opportunity arising from the enterprise's supply chain upgrade and the global expansion, penetrating from single customer touch points into industrial upstream and downstream, helping Chinese enterprises accelerate overseas expansion from a a long-term growth. On software side, especially the software, AI deliver end-to-end enablement across as a logistics operation and drive revenue growth, efficiency gain, and the cost reduction.

On hardware side, we're rolling out cutting-edge smart equipment at a scale, including the automatic warehousing, unmanned transportation, keeping us at the industrial forefront. In terms of our business, and our parcel volume grew by 0.2% against the high prior-year base, revenue exceeding 155.5 billion, up by 5.9% in H1 of this year, or equipped advancing our second growth curve.

Breaking down Express logistics grew revenue grew by 3.2%, while supply and internal revenue grew by 50.6%, organic supply chain and incremental growth as much as 47%. On profit side, last year result included roughly 600 million one-off gain from the deconsolidation of the SF Southern Logistics REIT, re- recreating a high comparison base.

Profit attributable to the owners of the company after deducting nonrecurring gains and the losses, better reflects underlying operating performance. In H1 of this year, the number reached 5 billion, up 9.3%.

Besides the buybacks, we are also going to continue to improve the dividend payout ratio, Alex were going to elaborate on this point further. I'm sure many of you are concerned about the impact of the rising oil price in H1 of this year.

I'd like to emphasize oil price fluctuation is a short-term headwind, where operational optimization and lean management are the direction the company's consistently pursue over long term. In H1 of this year, profit-lifting program, lean management, and scalability initiative, together with a net effect of the AI application, each generate hundreds of millions of the level positive in creating contribution, offsetting earnings pressure brought by the high oil price.

Profit attributable to the owner of the company, after deducting nonrecurring gains, grew by 9%, which demonstrated SF operational resilience amid external disruptions. Overall speaking, after years of the development, SF domestic business continue to hold industrial leading position, forming a solid foundation with continued deepening moat, where at the same time, we actively seize opportunities from the enterprise's global expansion, accelerating the momentum of our supply chain and internal international second growth engine, end-to-end AI enablement also across the logistics operation, started to deliver tangible results.

I will walk you step by step. Look at our revenue structure.

SF domestic business maintained steady growth. Cold chain and pharmaceuticals was affected by weather, with reduced yield in some fresh foods.

Meanwhile, both revenue share and YoY growth rate of the supply chain and international expand further. I will provide you detailed review of the performance by segment.

Let's talk about the time-definite express. The revenue grew 0.2% in H1 of this year.

Taking into account the courier pick-up intensity and the value-based operation, if we believe the delivery intensity is too high, it's going to impact on the quality of the service. That's the reason we proactively adjusted our strategy on certain return parcel at the end of last year.

Nevertheless, prime time-definite express revenue still outpaced GDP growth. Drawing on the long-accumulated scale leadership, SF competes beyond the speed.

We understand customer needs in-depth and keep cultivating niche production-side and consumer-side use case to further deepen our moat in the prime track. Let me just to give you two cases.

Both case are supporting 100 million in H1. The first one is concert.

We served 780 concerts in H1 of this year, providing not only luggage and the merchandise storage for audience, but also marketing and interactions that deliver emotional value. The second one is exhibition.

We help exhibitors ship samples and hi- exhibit, extending service across the full moving and move-out circle. In H1 of this year, we moved and served more than 2,000 exhibitions, many single event revenue exceeding 1 million RMB.

Going forward, we will continue to enrich customer touch points and strengthen multi-channel cooperation with co- culture and tourism groups and the event organizer. Economy express revenue grew by 7.5% in H1 of this year.

Our core strategy is to optimize business mix on the revenue side and refine tiered operation on cost side. In terms of that volume, the two-year compound growth rate was 15%, outperforming the industrial 12%, demonstrating resilient volume growth.

Building on this, we kept advancing profit-lifting program, raised the share of the high-value customer, and delivered a 6% growth in parcel ASP. Together with intra-city on-demand delivery, we promoted last-mile network segmentation for e-commerce parcel to realize precise matching between products and resources.

The centralized e-commerce parcel pickup rate rose from 8% last year to 30% in H1 of this year, centralized pickup parcel achieving a unit cost saving of RMB0.2 per parcel. Let's talk about freight.

Freight revenue grew by 12.6% on YoY basis. Building on the scale leadership, combined shipment volume across SF SF Freight, SX freight dual network increased by 9%.

We strengthened our sales force and targeted the industrial large item market, capture the incremental growth. In H1 of this year, industrial large item above 100 kg accounted for more than 55% of the total freight volume.

Volume grew by 20% on the enlarged base. While at the same time, we strengthened our strategic partnership with Deppon.

In June, average daily integrated freight volume with Deppon exceed 200 100 2,100 tonnes, up by 58%. Through synergy across the three networks, our freight business has built an LTL network, combining scale and differentiated service competitiveness.

Gross profit per kilogram improved significantly and further enhanced profitability. For SF intra-city, the on-demand delivery, you may refer to separate disclosure from SF intra-city for more details.

I'm not going to elaborate on this. Supply chain international revenue grew by 50.6%.

Organic revenue, excluding KRN, reached 47 on YoY basis, accelerated from 32% in 2025. Our second growth curve has entered into a phase of broad-based acceleration driving by two pillars.

International express, cross-border e-commerce logistics grew by 60%. For B-end international express, we made further breakthroughs in the heavy cargo segment, such as the transportation for the robotic lawnmower.

On the C-end, we continue to cultivate high-value individual shipments. In cross-border e-commerce logistics, we maintain leading positions on key lines, including China-UK, China-France.

As tariffs and regulatory requirements tighten, SF end-to-end compliance capacity win many customer preference. Secondly, international supply chain deliver standout performance, with revenue rose by 155%.

We focus on chain leader enterprises, dig into full-scenario client's demand, extend service across upstream to downstream. We also target local key industries, for example, headquartered or entity economy, K-beauty, and telecom hi-tech in South Korea, high-precision equipment transportation demand for AI industrial chains in Singapore and Malaysia.

Going forward, we will extend from single product to end-to-end solution and strive to become a preferred logistics partner for Chinese enterprises for global expansion. I have two case to share with you.

The first case features our long-term partnership with a global leading hi-tech customer. We first engaged the clients in 2011 with finished goods sales logistics for express delivery.

In 2018, we jointly built automatic benchmark warehouse for its global finished products business. In 2020, we expanded into procurement logistics.

In 2022, we supported its global expansion strategy with overseas integrated warehousing distribution. In 2024, we deployed the line-side warehouse operation and its production site.

Over the years of cooperation, our system, include OTMS, has been integrated with client system to realize end-to-end connectivities. This year, we also build LLP, lead logistics provider model to orchestrate digital intelligent supply chain service for this customer.

We have grown alongside with the customer, evolving from a domestic express vendor into strategic partner, helping the clients to grow global resilience. Over the past 10 years, logistics revenue entrusted by to SF increased by fivefold.

Express delivery dominate revenue in early days. Nowadays, supply chain international accounted for roughly 70%.

Though international business currently only take single-digit share, it grew by 30% YoY, signaling ample upside from the global expansion opportunities. The second case is that what we support a leading 3C company for its production capacity extension in Vietnam.

The customer has nearly 300 upstream suppliers. Under the prior model, supplier must handle delivery on their own, resulted in fragmented cargo status and ETA information.

End-to-end visibility for cross-border flow was limited, and flexible resources adoption was required amid volatile production demand. SF delivered a suite of tailored solution.

We have onboarded more than 80 upstream suppliers for this client, updating unified pickup, consolidating, and transportation. By integrating the customer's system, we implemented a single-code full-chain traceability for China-Vietnam cross-border logistics to achieve the full-route visibility across airport, transit, and in-house workflow.

By deploying self-operated center house and fleet near major production base, we took over the customer's CMI workout warehouse operation and park-based transfer business. Now, we have connected full-chain workflow covering raw materials, production, finished goods sales, cross-border logistics, and multi-category warehousing for this customer.

We have freed up over 4,500 square meters for the line-side warehouse space, substantially cutting material turnaround time. Logistics revenue contributed by this customer was grew by 200% this year.

In the near future, we will further extend into the service of the customer's downstream partners, upgrade in-factory logistics fulfillment leveraging the unmanned technologies. Our capacities to deliver end-to-end cross-border logistics service is underpinned by forward-looking global resources deployment.

The two slides going to be skipped by me. However, as we're providing end-to-end solution, this actually has everything to do with our resources.

As the end of the June, our total overseas warehouse footprint exceed 2.75 million square meters. Cargo throughput as Ezhou air cargo hub ranked third among global logistics players cargo hubs, highlighting evident scale effect driven by the airport-oriented industrial cluster.

Then, let me also talk about our operational foundation. We have deployed smart equipment at a scale across every operational link.

In digital and intelligent warehousing, we deployed ACR robots and AMR robots. Warehouse operations are empowered by capacities including AI quality inspection and wave planning.

We have built multiple industrial benchmark warehouse covering footwear, apparel, beauty, and 3C sector, helping customer cut inventory costs by 10% to 20%. On sorting and transit, we accelerated the construction of the cargo trailer transfer center.

Upper body humanoid robots and robot arms been deployed for small parcel feeding, and a large pallet palleting around 2,400 AGVs been in in- used. Sorting operation efficiency's been rose by 7.4%.

We pursue green development with 5,400 NEVs and more than 1,400 autopilot trucks been put into operation. Light-duty and heavy-duty unmanned trucks also been deployed in park cargo transfer, as well as line-haul and short-haul transportation.

For last-mile pickup and delivery, couriers been regarded as our core competitive assets. We have launched six major benefit program for frontline staff.

Unmanned vehicle, delivery robots, and courier AI assistant improved working efficiency, reduce labor intensity. For example, unmanned vehicle can save each courier 1.5 working hours per day, cutting the repeated trips back to the service outlets.

Going forward, we will keeping spearheading the application of the cutting-edge intelligent technology within logistics scenarios, improving extreme experience to our customer. Let me welcome Yanfang to walk you through on the technological side.

Thank you. Hello, everyone.

AI technology are being quite rapidly deployed in all industries. I believe you want to know how SF using AI.

SF operate highly complex logistics scenarios with diversified product portfolio, facing stringent requirements for precise time-definite fulfillment. We post world-class operation research algorithm, plus our in-house developed Fengzhi LLM and Fengyu LLM with substantial untapped value from the full-chain AI enablement, as Sihai mentioned.

From the top-level design targeting end-to-end enterprise-wide intelligence, we have built an AI agent cluster of more than 10 core AI agents, plus dozens of business application agents, with initial realization of agent-to-agent collaboration. We also built an enterprise-grade AI application platform to foster employee-driven AI innovation.

The total number of deployed AI agent grew from 5,000 by the end of 2025 to more than 50,000 now. Let me just talk about how we use AI for revenue expansion and cost reduction.

The first case illustrate revenue growth driven by synergy between customer agent and sales agent. Five sub-agent cluster work in coordination under the customer agent.

Opportunity sub-agent automatically mine potential business leads, leverage internal external market signal, for example, identify enterprises with global expansion intent, or sporting exhibition cooperation opportunity from public event data. After leading lead identification, leads are graded and categorized into the sales agent, and we are going to sell those number to frontline sales and outlet managers.

Meanwhile, AI auto-generates pre-visit a one-page and sales script. Massive follow leads going to be screened via AI outbound calling.

AI sales agent can also send contract-related message to escalate the human representatives. Further more, quality, profitability, and risk sub-agents continue to monitor service quality, pricing, resonability, and realize closed-loop management.

In H1, leads dispatched by the system achieved a 67% follow-up rate and 6% conversion rate for frontline team. AI outbound call registered around 40% answer rate, 8% contract signing rate, create initial revenue of 1.6 billion in incremental way.

The business upside will unlock more opportunities in the near future. The second case showcase cost reduction potential unlocked by collaboration between planning agent and fulfillment agent.

Taking ground transportation as an example, the planning agent deliver volume forecasting, route and resources planning, post-event optimization. After receiving the route requirement, the fulfillment agent perform automatic vehicle st- schedulings and dynamic resources dispatching.

Supported by the AI agents, the network-wide route re-optimization for peak holidays being to be shortened by three days to 6.5 hours. Automatic scheduling covers more than 98% of the network, line-haul and short-haul routes.

Execution rate of the AI dispatching instruction exceed 90%. Response time has been further optimized.

Network-wide fleet load diagnosis automatically reviewed the next business day, greatly improve self-operated fleet utilization. Parcel quality agent safeguards end-to-end fulfillment.

Fengyu vision large language model across the whole network delivers second-level conclusion for individual parcel exception diagnosis. YoY improvement has been identified.

Now, enabled by planning fulfillment agents, tangible cost saving has already been seen in H1 of this year. Let me welcome Alex to talk about financials.

Thanks for Yanfang. Dear investors, good evening.

Just now, Sihai has already given an overview of our interim results. Here, I will focus on the company's second quarter performance.

Q2 2026 brought both opportunities and challenge for SF Holding. We kept advancing lean operations, the profit-lifting program, and AI-driven efficiency gain, which partially offset short-term disruptions from the higher oil price and delivered possible gross and profit attributable to the owners of the company after deducting the non-reoccurring gains and losses.

Against geopolitical volatility, supply chain and international business further demonstrated its value and gross potential. Second growth curve accelerated on the broad-based front.

In Q2, parcel volume reached 4.1 million billion, down by 3.7% YoY due to the high baseline last year, along with our proactive product optimization to focus on value-based operation. Revenue hit 81.4 billion, grew by 5.7%.

GP margin reached 10.7 billion, up by 6%. The GP margin rate was 13.2%, improved by 0.04%.

Affected by the high base from the deconsolidation of the share rates in the prior year, profit attributable to the owners of the company fell 50.1%, reaching 3 billion RMB. Excluding share rate one-off gain, it grew 2.3% on YoY basis.

Adjusted net profit, which better reflects underlying performance, stood at 2.7 billion, up by 3.1%, with adjusted net margin of 3.3%. In terms of the gross profit in H1, gross pro- profit was 20.9 billion, up by 7.7%.

Gross margin rate stood at 13.4%, grew by 0.2 percentage point. Facing the moderating domestic industrial gross and complex global landscape, the company kept executing several core initiatives.

On the revenue side, with with adhere to the value-based operation with deep and diverse scenario demand, including industrial production, corporate global expansion, continue to optimize product mix to drive high-quality revenue gross. On the cost side, we advanced operating model optimization, integrating high-quality resources, such as SF intra-city on-demand delivery, improved precise matching between resources and product, and build a more flexible fulfillment network.

Meanwhile, we accelerated the large-scale rollout of AI technology and smart equipment. Rich use case and business data feedback into algorithm iteration to raise operation ac- accuracy of the intelligent hardware.

This will unlock the full-link digital intelligence potential for cost reduction and efficiency gain and reinforce our profitability resilience. Let me talk about cost, for sure.

The company pursued lean management and kept delivering structural cost optimization. Breakdown by cost category can be seen in the following way.

Labor cost to revenue ratio down by 1.4 percentage point on YoY basis. On one side, we proactively optimized business mix, control the share of the low-margin e-commerce parcel while curbing the high labor intensity.

We also pushed precise product resources matching. On the other side, intelligent and unmanned technology eased the workforce burden and lifted the operating efficiency, enabling the couriers to devote more energy into high-value customer-facing work.

The second point, transportation cost to revenue ratio rose 1.9 percentage point on YoY basis, mainly driven by the external headwinds of the higher oil price in Q2. In parallel, we scaled up direct ground trunk routes and added international flight frequency to strengthen our network competitiveness, where, at the same time, we accelerated the deployment of NEVs, autonomous driving, and unmanned vehicles, and leveraged digital intelligent tools to optimize network planning and improve the operational efficiency.

The third point, other operating cost to revenue ratio down by 0.7 percentage point. Guided by the mid- and long-term strategy, we increased investment in strategic resources, including the sorting center automation, last-mile touch points, and overseas warehouse.

We also refined resources deployment governance to boost the asset utilization rate. In terms of the expenses ratio, as you can see here, the G&A expense to revenue ratio edged up by 0.1 percentage point, mainly attributable to the head count expansion for overseas business rollout in Q1.

Guided by the lean operation and the technology empowerment, we pushed the organizational flattening. J ratio's been effectively declined in Q2.

For sales expense, sales team are incentivized by the high-value business expansion KPIs, accelerating new staff onboarding, keeping S&M expense to revenue ratio flat year-by-year. Powered by AI algorithm, R&D efficiency kept improving, with R&D expense to revenue ratio down by 0.1 percentage point.

Meanwhile, the lower average outstanding borrowings reduced interest expense, driving the finance expense to revenue ratio down by 0.2 percentage point. Taking all those factor into consider, total four major expenses ratio down by 0.2 percentage point in H1 of this year.

Let's also talk a look about the capital structure. In H1 of 2026, asset liability ratio of the company stood at 50%, modest increase versus the end of 2025.

From the bridge bank loans took care from the GT strategy equity subscription. Excluding this bridge loan impact, the asset liability ratio would be dropped to 48.5%, which is very healthy.

On cash flow, cash flow from operating activity, OCF, reached 11.2 billion, down by 14%. This was jointly driven by the shift timing of the operational recipients and the payment due to business mix change as well as tax payment.

To consolidate the long-term core competitiveness, we strictly control return on investment and kept increasing forward-looking investment in sorting hub automation, smart equipment, NEVs. Automatic hardware is expected to be continued to lift operational efficiency and accuracy.

NEVs will gradually reduce our resilience on fossil fuel. As a result, CapEx in H1 was 6.1 billion, improved YoY.

Let's also talk about the shareholder returns. SF attach great priority to shareholder returns.

As you have already seen, we ramped up share purchases since last year. We just fully completed a 6 billion A-share repurchase plan for consolidation, where sitting was double at the end of March.

Those repurchase shares would be canceled afterwards. Under the inaugural HKD500 million H-share repurchase program launched this year, 230 million has already been utilized as the end of July.

On dividends, to reward the shareholders and based upon our solid confidence in future development, we lifted the 2026 interim payout ratio from 45 40% to 45% of this year. Expected interim cash dividends amount to 2.5 billion, up by 8%.

Furthermore, I think you probably see from our announcement, we propose to revise the 2024 to 2028 five-year shareholder return plan, targeting full-year payout ratio of 45% for physical year 2026, rising to 50% for physical year 2027, and no less than 50% for fi- financial year 2028. Going forward, SF will honor our commitment to the share operating gains with the shareholders.

Keep executing shareholder return initiative to thanks for shareholders for your long-term support. This conclude our prepared remarks.

I will hand over to Guanding, please.

Thank you, Alex. Now let's move into the QA session.

Please help us to read out how we are going to raise a question. Ladies and gentlemen, if you'd like to raise a question, please press star and 1.

For people join through the webcast, please hope to leave your question in the chat box or even you can press the hand-up button to raise your question in voice. Ladies and gentlemen, if you'd like to raise a question, please press star key and then number 1.

For online participants, you can ask your question in text in the live room interaction areas or even you can click on the hands-up button to raise your question in voice. Coming next, let's welcome the audience whose number ended with 8343.

Please identify yourself.

Thank you. Hello, everyone.

My name is Liu Gangxian from CICC Transportation. I have a question.

Congratulate on the company for such a good performance in the volatile external environment. Especially, I see that gross profit and also the net profit are also see stable gross.

My question is regarding the time-definite parcel, especially the prime time-definite parcel in H1 of this year still going to see a very nice growth. How the company look into H2 of this year, would like to plan to tap into the growth of the potential prime time-definite express, and how does the company view full-year growth?

Hello, let me help to answer the question. Our time-definite express business leads the industry in scale.

Its revenue market share ratio is already rising to 66% last year. On this basis, our prime time-definite express still achieved the revenue gross 5.3%, outpacing the 4.7 GDP gross.

Our competitive moat kept deepening, demonstrating the gross resilience. The gross are still stand primarily from the two levers, including scenario expansion and service upgrades.

Regarding deepening the scenario expansion, we continue to push for scenario express groups, shifting from passively taking order to proactively creating demand. I was talking to my team all the time.

We secure positioning in the core channel. For culture and tourism scenario, besides the concert I mentioned in the prepared remarks, SF has also aligned with China's multi-tier policies to boost the culture and tourism industry.

Because different provinces and cities are promoting culture and tourism industry, we adopt a three-layer strategy, broad coverage, specialized execution, and a blockbuster impact. We widely deploy outlets at airport, high-speed rail station, hotels, and scenic spots.

I think on your business trip, you may see many of our outlets over there, where, at the same time, we also fix on six categories of the partners, including culture tourism group, airlines, and OTAs, and sports and performing arts organizations. For example, we launched the Easytravel worry-free luggage project with China Eastern Airline, with luggage shipment surpassing close to 20,000 orders in H1 of this year.

Our strategic cooperation with China Tourism Group covers 60 scenic spots nationwide. In H2, we continue to extend into various culture and tourism sub-scenarios to consolidate our leading position, where, at the same time, we are also deeply cultivating channels like residential communities, campuses, and CBDs, intensifying the touch points, such as community stations, university outlets, and on-site presents at the landmark office building.

We're also exploring emerging business, such as the gifting scenarios and the circular economy. In addition, we continue to strengthen our penetration into industrial zones, leveraging high time-definite transportation capacities to take on the ex- accelerated shipments for factory raw material replenishment, spare parts, and precession samples, ensuring our customers' production lines run continuously and efficiently.

Secondly, we continue to upgrade our service capacity. Effective from August 18, SF time-definite express product system underwent another comprehensive upgrade.

We in- shoot introducing a diversified product matrix, for example, SF same-day, next-morning, and next-day delivery, redefining product and service standards through the certainty of our time-definite capacities. We also extend our late delivery compensation service nationwide, covering all three time-definite products, so that speed has a benchmark, punctuality has a guarantee, among which SF same-day leverage optimal resources and making sure the delivery could be done with as fast as four hours, covering more than 300 cities near airports and high-speed rail station across mainland China, continue to lead it on benchmark for prime dive time-definite express and enhancing customer experience.

I hope you can try our product, because you are going to get a compensation if any delay happens. We hope by leveraging this service commitment, we can also support the whole industry to achieve the higher efficiency and better service, really compete on the service.

Looking ahead to H2, the current micro-landscape still remain divergent. GDP growth mainly driven by export, and the domestic retail sales is kept at a moderate pace, against the high business base in the same period of last year.

Nevertheless, draw on the multi-scenario penetration and iteration of the prime time-definite express, we hope we'll be confident in driving healthy growth of our time-definite business, please.

Thank you. I hope that in the near future, we'll be able to enjoy the quality service from SF.

Thank you. Now let's welcome the second question.

The phone number ended with 8663. Please identify yourself.

Thank you. My name is Shen Xiaofeng, coming from Huatai Securities.

I have a question regarding the industrial transformation. The company continue to advance industrial-specific transformation.

How the new recruited the salesperson performed? Are there any assessment metrics?

Will you increase the team size? If yes, what will be your target head count?

How much revenue and profit can it contribute? Thank you.

Thank you. I'm Yanfang.

Let me just help to respond to the sales question. The salespeople recruited last year, after more than one-year integration, has already be deeply embedded into our business line, create value for our industrial-specific transformation.

At the end of the June of this year, the sales team already stabilized at around 4,000 people, among which industrial sales focused on the customized the supply chain solution for major clients, industrial zone sales cultivate incremental growth, and also the well-invested the cross-border business, like the customer clearance and declaration, overseas warehouse, the sales team, and also continue to refine the tiered customer management, delivering specialized and precise empowerment. Efficiency of the team continue to improve.

The average time for new hires being close to their first order shortened from 73 days to 61 days. At the same time, we have upgraded our assessment system and last-place elimination elimination mechanism, guiding the sales to focus on long-term value across dimensions, for example, in customer profitability, payment collections circle.

In H1 of this year, SF organic supply chain incremental revenue accelerated to 47%, where supply chain service revenue in sub-segment like electronics component, telecommunication equipment, and consumer electronics been grow from 27% to 53%. Under the rigorous assessment mechanism, the size of the company's sales team will have some dynamic changes in line with the pace of the business development.

Following the principle of the selective recruitment, we're going to focus on strengthening our industrial zone sales and the international sales capacity. We're also applying strict assessment based upon the co-efficiency metrics and a profit per capital to improve the sales team's input and output ratio.

Thank you.

Thank you, which can actually boost my confidence and understanding your sales team much better. I really hope that you are going to have a good business and with wonderful scorecard.

Thank you. Coming next, let's welcome the next investor.

The phone number ended with 2317.

Hello, everyone. I'm Zhao Yingfan from Bank of America.

Supply chain and in- international revenue growth was very strong in H1 of this year. How much do international express, international freight forwarding, cross-border e-commerce logistics, and integrated supply chain each contributed?

What about the profitability? We would like to understand the mid- and long-term strategy and financial targets.

Thank you.

Thank you. I'm Sihai.

Let me help to respond to the question. Against a complex and volatile international backdrop, the supply chain and international business show healthy growth momentum in H1.

The total segment revenue reached 39.6 billion, up by 16%. Within that, organic growth, excluding KRN, accelerated further, up by 47%.

Breaking down that 39.6 billion revenue, KRN business, as international freight forwarding, contribute 60% of the revenue. Domestic supply chain, लाइसेंस such as SF DHL and DSC, contribute 40%.

International supply chain business contribute 10%. International express and cross-border e-commerce logistics for another 10%.

Regarding segment profitability, with the strategic transformation of KX in Thailand taking hold, the losses continue to narrow down, and the the segment continued advance lean operations and contribute to unlock the synergies with business, such as KRN and DSC, and turning a loss to a profit YoY in H1. Profitability improved by nearly 40 million RMB.

Over the mid- and long-run, we are committed to become the global logistics partner for companies to going global. We're going to work on three things.

Capacity building, centered on our Ezhou air cargo hub. We are intensifying the route in key markets such as Europe, Southeast Asia, Japan, South Korea, expanding the express LTL transit coverage, leverage GMS single permit access to six countries in south and TIR cross-border direct access to Eurasia continent and the north.

On the basis of our current 2.75 million square meter of the overseas warehouse, we will continue to expand and extend our operating capacity to multi-categories, for example, the temperature- and humidity-controlled storage, building efficient and coordinated global backbone logistics network. Second point, how the products go for global expansion.

On the merchant side, we also expand dedicated international outlets in specialty industrial belts to ensure goods can be loaded onto flights quickly. On the channel side, building on our cooperation with leading platforms, we are developing brand independent website and the local overseas e-commerce channel.

As cross-border regulation and tariff policy growing increasingly stringent, non-compliant logistics providers being cleaned out, as you can see from the media, where for the company, join on our full-chain compliant fulfillment capacity, we are confident we can continue to gain market share. My third point, our capacity global expansion.

We were deeply engage with chain leader customers, coordinating and managing their upstream and downstream logistics needs, helping those companies to upgrade their supply chain system, optimize inventory costs, and improve the capital turnover efficiency. At the same time, we are confident to accelerate the build-out of its international supply chain control power, integrating the management of the operating, quality control, risk, and using digitization to empower the scale expansion and the lean management of the cross-border supply chain.

The President once said, SF going to shift from the cost of the product transportation to support the customer to reduce their inventories and reduce their overall manufacturing cost. In sum, we believe revenue contribution from supply chain international business will continue to rise with a healthier structure, and profitability will gradually unlocked.

Thank you. We hope SF a better business.

Coming next, let's welcome the next investor whose phone number ended with 5819, please.

Hello, everyone. Good evening.

I'm Du Sujia from Changjiang Securities. I have a question for the management team.

Would you mind to give us a few guidance? We're pleased to see the company further enhance shareholder returns.

The oil price has also be cut down somewhat recently, and I surely believe it's going to be a positive impact on your cost. Can the management team to update me on the latest guidance for the full-year outlook?

For example, CapEx, what would be the full-year CapEx for 2026, whether you are going to adjust your investment cadence considering your earnings, the oil price, and CapEx, whether your free cash flow going to perform for this year? Is it possible for the management team to also share with us your guidance and outlook for the full-year performance, to see if there's any updates?

Thank you. I'm Alex.

Let me help to respond to the question. As you are asking about the CapEx, free cash flow, and full-year performance guidance, on CapEx, in H1 of 2026, the company asset CapEx was 6.1 billion, accounted for 3.9% of our overall revenue, increased compared with last year, mainly related to the pace of the investment to strengthen our long-term competitiveness.

With an eye on the long-term structural cost reduction, we have already made some front-loaded investment focus on the site renovation, unmanned and intelligent equipment upgrades. Along with our business volume increase, we actually acquired more transportation-related hardwares, including the aircraft engines and NEVs.

Yanfang was also talking about the AI application in the prepared remarks. That's the reason the CapEx slightly increased compared with the same period of 2025.

One thing we'd like to guarantee is that every CapEx we're going to bring a reasonable return. For the full year, for the overall CapEx, compared with what we forecasted by the beginning of this year, I was talking about 1 12 billion by the beginning of this year, but we would like to maintain this forecast, still 12 billion for CapEx in real execution.

You may also want to know more about the CapEx allocation. I think I have already mentioned that in where we're going to use the CapEx.

Let's talk about the cash flow. In H1 of this year, our free cash flow was around 5 billion RMB.

Personally speaking, I believe it's a very healthy one. Regarding the capital allocation, we need to balance the company's long-term sustainable development with the return value to the shareholders.

As being introduced in the prepared remarks, the 2026 interim dividend payout ratio has been improved from 40% last year to 45 of this year, increased by 8%. We also plan to set the full-year annual dividend payout ratio to be 45%, and even rising to 50% for 2027, and no less than 50% for 2028.

I think these fully demonstrate management's firm confidence into our future operating fundamentals and cash flow stability. I think I did a quick calculation just now.

In H1 of 2026, A-share plus H-share repurchased totaled 4.37 billion, together with proposed interim dividend, 2.5 billion. Altogether, that was 6.87 billion, equivalent to 125% of the first half profit attributable to the owners of the company, which truly demonstrate our confidence in managing the cash flow.

Looking into the second half of 2026, or even the full year, I think my teammate has already showed with you, on the domestic market, we will continue to dig deep into diversified consumer sub-scenario. We're also going to support on the 2B enterprises transformation and upgrading, keep on deepening our competitive moat.

On the international side, we will firmly seize opportunities for Chinese companies and brand, as well as their capacity to going global. This is, indeed, a real opportunity to us.

We need to accelerate the development of our second growth curve business. At the same time, I think you may see from the report, we have accelerated the development of the business indeed, which is truly encouraging.

I surely believe this gross momentum going to be sustained. In addition, we're going to accelerate the deployment of intelligent equipment and the AI application, converting our technical trends into long-term operating returns.

Overall speaking, in H2 of this year, the external environment is still carry multiple uncertainties, but at the same time, as you may notice, the oil price, compared with the track record, is still kept at a very high level. Those are the uncertainties we already identify in the market.

However, the company will remain steadfast in our operating strategy, continue with lean management, and strive to deliver a solid revenue and profit for H2 of this year. Thank you.

Thank you. Thanks for Alex.

Hope the company could continue to maintain a healthy and good development, bring more returns to the shareholders. Thank you.

Good. Coming next, let's welcome the next investor whose phone number ended with 3134, please.

Hello, everyone. I'm Kuang Peiqing from Guohai Securities.

I have a question regarding technology and AI of SF Holding. Traditionally speaking, we believe SF is actually a ex-tech logistics company.

You do have a very strong underlying data, along with the complex business scenario. If AI's being widely adopted, I think SF would be the first one to benefit from the technology trend.

Just now, Yanfang was talking about your investment in AI. I surely notice your investment in technology and AI is actually leading the industry.

I'd like to ask you, are there any future development plan in AI and technology investment? How do you view the future benefits that technology and AI will bring?

Thank you. Regarding this question, I'm Yanfang.

Please allow me to respond to the question. AI being developed till today, the core variables in AI, including scenario data, algorithm, and computing power.

Computing power is easiest to obtain. However, use case or we call scenario and the data are coming from the long-term accumulation.

On algorithm and the model, in 2024, we have already launched our self-developed logistics vertical large language model, including Fengzhi and Fengyu, enabling intelligent decision-making, one-sentence order placement, automatic summary of the customer service record, and route planning and packaging optimization, making AI both logistics-savvy and SF-savvy. In the era of accelerated AI adoption, I think our core competitiveness rely with our complex scenario, plus data, and the self-developed model, a barrier that is difficult to be copied by other competitors.

Building on all those strengths, last year, we have already completed the deployment from a single point AI scenario. We have already rolled out 5,000 AI agent covering marketing, route planning, also fulfillment, customer service, and international business.

In 2026, we further encourage company-wide co-creation, with number of the agents growing from around or even reach 50,000 in H1 of this year. In 2026, contribution of the AI benefit would be released.

However, we believe in the near future, agent application would ultimately free people from the business workflow. You can see through the past information reform, we distill the human experience into our system through deployment of AI agent, we achieve AI-assisted work that can provide recommendations, but it is still a human who are ultimately clicking on the confirm button.

What we're trying to do is to AI driving both decision-making and execution. Human just intervene when exceptions happens.

We are iterating and upgrading AI agent cluster up, connecting and coordinating and dispatching capacity across agents, so that AI can, on a broader scale and at a higher quality to assist and free the work of SF people, allowing everyone to step away from the tedious tasks and think about high-value questions. In the ideal future state, AI will support a complete operational business loop, where SF people were responsible only to setting goals and monitoring the system.

Let me just give you an example, sorting center operation in the near future. The system manage the site, equipment, and personnel, and a person only needs to glance at the data dashboard each morning to confirm the system is running normally.

In short, SF will continue to lead the application of the cutting-edge technology in logistics sector and keeping increasing our AI investment. Our goal at the current stage is to have agent handling 80% of the routine decision, where human beings only need to handle the 20% of exceptional case.

Look ahead to 2027, AI will offer substantial incremental potential across both revenue growth and cost reduction. Thank you.

Great. Thank you.

We really look forward SF can continue to lead the industry for technology and for logistics technology and AI. Next investor whose phone number ended with 3815, please.

Hello, everyone. Hello, management team.

My name is Hu Shuming. I just have one question to the management team.

I come from CITIC. I'd like to ask you, has the adjustment of the customer and the product mix for economy express largely been completed?

How do you view parcel volume growth in H2 of this year? With industry growth slowed down, what cost reduction measures that the company have to address the impact of the idle capacity on profits?

Thank you. Thank you.

I'm Sihai. Please allow me to respond to the question.

Since launching our profit-lifting program last year, we have been continuously to optimize product and customer mix mix in rising the share of the high-value business while lifting the economy express parcel ASP by 6%. In H2 of this year, considering the high baseline in Q3 last year, it will create some pressure on the overall gross, but we expect an effective recovery in Q4.

It is worth mentioning we will adhere to value-based operation, continue to improve the revenue quality through reasonable pricing, maximize optimization rather than simply pursue scale. While improving the revenue quality, we will enhance economy express profitabilities through the means such as tiered last-mile network operation.

I noticed the industrial growth's been slowed down, but returning to the fundamentals of the running the business, what we need to solve is how to manage the cost while continuing to refine our service. We firmly believe a customer's being and a cost cost have been engineered by design.

Design lies in the application of new technology, transformation of the model, achieve efficiency gain and cost reduction through structural reconstructing. In transit, we continue to invest in automatic equipment, for example, like robotic arms and AGV, coupled with human-machine collaboration model to improve efficiency.

At the same time, advancing sorting center consolidation to build cargo trolley transfer center to improve the line-haul routes and improve across-all throughput efficiency. Recently, I visited a few centers, and I find out the efficiency's been greatly improved, but further room could be used to improve the efficiency, especially in Q4.

I personally provided many suggestions to my colleagues on-site. In transportation, to cope with oil price volatilities, we will accelerate the replacement with NEVs.

We are piloting the integrated solar storage charging projects to reduce energy cost. We'll also use unmanned light truck on broader base to improve the in-park cargo transfer and short-haul cost.

Regarding the supplier ecosystem building and round-trip bilateral route matching, those would be something we're going to continue to carry on, with good achievements been made in H1 of this year. For last-mile delivery, we use unmanned vehicles to save the courier's round-trip time and drive precise matching between resources and products.

For example, in the pickup stage, we continue to roll out the centralized e-commerce parcel pickup model, renovating last-mile outlets and coordinate external resources for intra-city on-demand delivery, conducting one to two centralized pickup per day in merchant-dense areas, reducing fulfillment cost while safeguarding the C-end customer experience. In addition, Yanfang just explained, we have deployed the corresponding agent across the full-link operation chain, which will generate even greater incremental potential for cost reduction in the future.

Overall speaking, we will unswervingly stick to the value-based operation, and structural cost reduction and technology empowerment as our key lever, continue to build a flexible, efficient, and healthy, profitable logistics network. Thank you.

Okay.

Very clear. Thank you very much.

I wish the company an ever-growing business. Okay.

Thank you. Due to time reason, ladies and gentlemen, we're going to have the last question for today.

Let's welcome the investor whose phone number ended with 0500, please.

Hello, everyone. Thanks for the question opportunity.

I'm Steve from Goldman Sachs. I have a question regarding G&T cooperation.

The company's strategic equity investment in G&T has been completed. The cooperation has been implemented between the two sides so far.

What plans are there for the future? When will this transaction into quantifiable contributions in terms of the revenue, cost, and synergy, and the capital returns?

Thank you. Thank you.

Thanks for Steve. I'm Alex.

Let me respond to the question. As many of you may notice, we completed the strategic equity investment transaction with G&T in early June.

Against this backdrop of the strategic complementarities and the deep synergy, the both sides have carried out a range of the cooperations with implemented projects. That, from the very beginning of this year, we have already expanding our scope of the cooperation.

Now, the implemented cooperation projects covering 40 countries. For example, in e-commerce last-mile delivery, in H1 of this year, we newly added cooperations in regions such as Indonesia and the Vietnam, leveraging G&T's efficient last-mile network to help SF further improve fulfillment efficiency.

In customs clearance, the both sides are jointly building customs clearance capacities in regions like Middle East, Mexico, and Central and South America, improving clearance timeliness and optimizing the clearance cost. In new product development, we have jointly developed a Malaysia to China cross-border personal shipping product with G&T, as well as domestic shipping service within the Philippines.

Those are be conducted continuously, one after another. In supply chain, leveraging SF's cross-border ground transportation capabilities, we provide G&T with Thailand to Laos cross-border ground fulfillment services.

Domestically, leveraging the last-mile stations and parcel lockers with SF system, we help G&T improve their last-mile pickup and delivery efficiency. The breadth of the cooperation and the depth of the cooperation has been continually expanded.

Going forward, we adhere to the cooperation strategy of orderly regional development, with priority focus on last-mile stage. Regionally, you see that, in each region, we're going to have a a tailor-made practice, and we're also going to give priority focus on the last-mile delivery.

Steve, in your question, you also asked about how SF Holding's been working with G&T. You can see that SF has appointed a non-executive director to G&T board.

The both me and Sihai was engaged in the mechanism to have the strategic discussions and also have the day-to-day liaison team in place. As regarding the scale of the cooperation, as G&T recently announced the related party transaction, which was expected to increase in H2 of this year.

In addition, following the delivery completion in June, we are also entitled to a share of the G&T annual net profit in proportion to our shareholding, which will recognize investment income accordingly. Going forward, we will look forward to deepen our cooperation with G&T.

Thank you. Very clear response.

Hope the company can continue to improve your business, especially international business.

Great. Ladies and gentlemen, here comes to the end of our investor presentation.

Thanks for joining us for this event. All the materials and slides will be available and be allowed for download at our IR website.

I'd like to remind all the analysts attended this conference, before we have the official website to make the official announcement, please don't forward or make the information public. If you have any question, please contact me or the IR team of the company.

Thank you very much. Good evening.